After the filing of the lawsuit, Bogart was permitted to notify the National Association of Medicaid Fraud Control Units (NAMFCU). Once NAMFCU received notice of the pending lawsuit it formed a committee to negotiate settlements between King and NAMFCU members (these members were states which did not have qui tam statutes and thus were not parties to the suit that Bogart filed).
King eventually settled with the jurisdictions for which Bogart had filed the qui tam lawsuit, and Bogart received counsel fees and expenses of $800,000 plus relator fees of over $9,000,000.
King also settled with the 40 non-qui tam states for over $30,000,000. Bogart argued that his actions produced those settlements, and that he was entitled to up to one-third of the $30,000,000. The District Court ruled that Bogart was not entitled to any of that money and Bogart appealed.
The Court of Appeals held that the District Court did not even have control over the non-qui tam states' settlement proceeds. The Court of Appeals also held that Bogart's litigation did not create a "common fund" that included the NAMFCU settlements funds.
The common fund doctrine “provides that a private plaintiff, or plaintiff’s attorney, whose efforts create, discover, increase, or preserve a fund to which others also have a claim, is entitled to recover from the fun the costs of his litigation including attorney’s fees”. The Court reasoned that there was no common fund because each non-qui tam state separately negotiated its settlement agreement with King.
The Court further held that there was no inequity to remedy because Bogart’s legal fees and expenses were all paid for and it was King that subsidized the litigation. Finally the Court stated it was not going to overrule the District Court’s decision because Bogart’s request was a “thinly-veiled attempt to obtain a reward for providing information about King from States that have declined to enact qui tam laws”.
The Court stated that applying the common fund doctrine to the additional settlements would judicially impose a reward status for whistleblowers on states that have chosed not to enact such rewards. The decision of the District Court was affirmed.
|Plaintiff Lawyer(s)||Plaintiff Law Firm(s)|
|Joel M. Androphy||Berg & Androphy|
|Samuel L. Boyd||Boyd & Associates|
|Guy W. Horsley, Jr.||Office of the Attorney General of Virginia|
|Timothy Lewis||Schnader Harrison Segal & Lewis LLP|
|Jennifer Nestle||Schnader Harrison Segal & Lewis LLP|
|Carl Solano||Schnader Harrison Segal & Lewis LLP|
|Defendant Lawyer(s)||Defendant Law Firm(s)|
|Michael T. Reynolds||Cravath Swaine & Moore LLP|
|David Engstrom||Harkins Cunningham LLP|
|John Harkins Jr||Harkins Cunningham LLP|
|Eleanor Illoway||Harkins Cunningham LLP|